The End: Ford Australia To Close Its Factories In October 2016

Some sad news to report from Australia today. Ford Australia announced that they will be shutting down operations on October 16, 2016. The shut down will close two factories - Broadmeadows and Geelong in Victoria - and cause the loss of 1,200 jobs.

During a press conference, Ford Australia President and CEO Bob Graziano explained the company could not keep building vehicles in a country in the country after reporting a loss of $141 million after tax last year, and losses totaling more than $600 million in the past five years.

"Our costs are double that of Europe and nearly four times Ford in Asia. The business case simply did not stack up, leading us to the conclusion that manufacturing is not viable for Ford in Australia in the long-term," Graziano said.

In a statement, Ford said they looked at all possibilities, including an extensive export program and manufacturing various types and combinations of vehicles for the marketplace.

“We did not leave any stone unturned but even with these assumptions the business case did not stack up,” said Graziano.

Ford says they will still maintain a presence in Australia through 1,500 team members, including designers and engineers, and more than 200 dealers. The company also announced updated versions of the Falcon sedan, Falcon Ute and Territory SUV.

Ford is transforming its Australian business by accelerating the introduction of new products for Australian customers, enhancing the sales and service experience, and improving its business efficiency and profitability

To better position the company to compete in a highly fragmented and competitive market, Ford will cease local manufacturing in October 2016. All entitlements are protected for the 1200 employees whose jobs are affected, and the company will work through the next three years to provide support

Ford will proceed with plans to launch updated versions of the Falcon, Falcon Ute and Territory in 2014, as well as offering other world-class products, such as the Ford Kuga, Ranger and Focus. The company will also strengthen its product lineup even further with a 30 per cent increase in the number of new vehicles offered to Australian customers by 2016

Ford’s presence in Australia will remain significant – with 1500 team members, more than 200 dealers nationwide and a continued strong commitment to supporting the communities in which the company operates

MELBOURNE, Australia, 23 May 2013 – Ford Motor Company is transforming its business operations in Australia to provide customers with even more new products, and improved sales and service, while creating a more efficient and profitable business structure.

Ford announced the plan today, including its intention to cease its local manufacturing operations in October 2016. The decision on local manufacturing was driven by increasingly challenging market conditions – including market fragmentation and the high cost of manufacturing. Ford losses in Australia in the last five years have totaled approximately $600 million (AUD).

“All of us at Ford remain committed to our long history of serving Australian customers with the very best vehicles that deliver cutting edge technology at an affordable cost,” said Bob Graziano, president and CEO of Ford Australia. “Unfortunately, due to challenging market conditions we are unable to do that longer-term while continuing to manufacture locally.”

Support for Employees

Approximately 1200 jobs in Ford’s Broadmeadows and Geelong manufacturing plants will become redundant when manufacturing at those sites ceases in 2016.

All manufacturing employees’ benefits will be provided in line with current agreements. During the next three years, Ford will work with affected employees and their representatives on support arrangements and provide clarity about the closure process.

“We know this announcement is very difficult, especially for our employees,” said Graziano. “Providing support to those in our team whose roles will be affected is a key priority for us during this three-year transition period.”

Future vision for Ford Australia

While the way Ford is structured is changing, Ford’s commitment to Australia remains strong.

“Ford will remain a significant employer in Australia, with more than 1500 team members, as will our network of more than 200 dealers around the country,” said Graziano. “The Australian team’s role as a global centre of excellence for vehicle development also will continue to be an important focus for us.”

Australia is currently one of four product development hubs for Ford globally. Recently, the Australian team has been responsible for designing, engineering and testing global vehicles, including the Ford Ranger and Ford Figo, and will continue this expertise.

Today, Ford has more than 1000 team members in product development in Australia, giving the company more designers and engineers than any other auto company in Australia.

“Our customers will buy and service Ford vehicles through the same great dealers we have throughout the country today, and we will continue to support the communities in which we operate,” said Graziano.

Decision follows comprehensive review process

Given the changing dynamics of the auto industry, a number of business scenarios were reviewed during the past year to determine next steps for Ford’s Australian business.

All viable alternatives were evaluated as part of the process including manufacturing various types and combinations of vehicles for local sale as well as the viability of a significant export program. The scenarios investigated also included varying levels of government support, manufacturing cost reductions and productivity improvements.

Australia has annual sales of approximately 1.1 million new vehicles, and customers have access to more than 65 brands and 365 models available for sale. This makes Australia one of the most competitive and crowded automotive markets in the world.

“Given the fragmented marketplace and the low model volumes that result, we decided that manufacturing locally is no longer viable,” said Graziano.

More New Products

As part of the transformation, Ford has aggressive plans to introduce even more new products for Australian customers – including a 30 per cent increase in the number of new vehicles offered to Australian customers by 2016. That is in addition to already announced new versions of the Ford Falcon, Falcon Ute and Territory, as well the new Ford Kuga, Ranger and Focus.

“We will be introducing a number of exciting new vehicles and technologies during the next few years that will excite our Australian customers,” said Graziano. “The breadth of our line-up will increase by more than 30 per cent, ensuring we continue to offer our customers an outstanding range of cars, SUVs and light trucks long into the future.”

Upgraded Sales and Service Experience

Ford also is significantly enhancing its approach to the sales and service experience. The company has appointed a dedicated Consumer Experience team to introduce a series of initiatives to provide customers with even better after-sales care.

“We have a range of projects under way to significantly enhance our customer’s experience with Ford,” said Graziano. “This includes one of the only programs in Australia that provides a capped price on all servicing costs for seven years.”

Ford continues to be part of Australian communities

“Ford vehicles have been part of the automotive landscape in Australia for almost 110 years and we have manufactured here since 1925. We are proud of that history. We are proud of our role in Australia and we haven’t made this decision lightly.

“Overall, we are changing, but our commitment to Australia remains strong. We’ll move through this transition and continue to be a vibrant and strong part of the Australian driving experience,” said Graziano.

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Not the first time we have seen stupid mgmt decisions out of Ford. Some of the worst decisions have come from Ford Family members who think because the name is on the company they can run the company. Seems they finally got a CEO who can run a company, lets just hope the bean counters DON"T destroy it like they did GM Legacy.

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Sad but true, it sounds like Australian car buyers have been shifting to FWD appliances the same way American buyers have done, leaving their large RWD models with a continually shrinking market share...

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Sad but true, it sounds like Australian car buyers have been shifting to FWD appliances the same way American buyers have done, leaving their large RWD models with a continually shrinking market share...

I would agree, a coworker was just there for a business trip and was surprised at how high gas prices are and how small cars were becoming. Seems they are in the same move to small Fuel sipping FWD appliances and are giving up on their amazing RWD driving dynamic auto's. Some will still survive, but sadly we are moving towards a new breed of drivers that I have come to hate.

The distracted, it is not my fault I hit you and I want to pay nothing driver.

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With the "Me too" thinking that GM is so often guilty of, this doesn't bode well for Holden.

The last bastion of what I love in cars is being swept away.

There is a way to solve this: build RWD sedans and coupes in the USA (or at least Canada). There will always be a market for RWD cars. Ford simply believes that said market no longer exists, and they are simply wrong.

Ford should have invested like GM did with Holden and sell the Falcon globally in the Middle East and the United States some time ago. GM was smart. They knew they could not sustain a specialized local market in Australia in the global economy. That is why they sold the Pontiac G8, The Pontiac GTO, the now Chevrolet SS and the Holden Caprice here as Chevrolet Caprice to offset the market in Australia. Exporting helds Holden's bottom line so they are not dependent on a local market. That is why they sell the Holdens in the Middle East as Chevrolets. That is how and why Buick got that Chinese Buick Park Avenue. That is why GM globalized the Holdens and aligned them with Chevrolets. The Barina is the Sonic, The Cruze there is the Cruze here. The Colorado is about to come stateside. The suv's are the same ones sold at Vauxhall, Opel, and Chevrolet. They could have sold the Falcon here as the Falcon as we used to have one in the 1960's. It would have allowed Ford to compete directly with the Chevrolet SS( which by the way is a Holden Commodore). I guess they felt it was too much money to do that. So now Ford Australia will be nothing but Euro Fords passing themselves off as global Fords for the Australian market. One Ford indeed....

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This was really one of the last hold outs in the "One Ford" strategy. It made zero sense having vehicles that weren't part of the worldwide lineup. Especially when manufacturing costs are so high and those vehicles are gas guzzlers. It is now cheaper to build a car in a Michigan UAW plant and ship it to Australia. Workers and management in Australia have to figure out how to reduce costs or they can stick their heads in the sand and watch the jobs leave.

A large part of the problem in both Canada and Australia is the strength of their dollars thanks to strong resource sectors and low public debt. On the other side we have the weak Yen, Us Dollar and Euro due to high public debt and struggling economies. The combination drags everyone down and kills manufacturing in places like Australia.

As for those of you who suggest shipping Falcons for Police Interceptor sales you may have forgotten the Buy American rules that are out there. Even though they break various trade agreements they are still common. Ford would rather market their made in Chicago( Taurus) product that doesn't face these barriers.

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Can't say I'm surprised. The Australian market simply doesn't have the sales volume to support market-specific vehicles anymore. GM has already realized this, hence why the Commodore has been exported to several other markets (and even then it might not be safe either). I had hoped that Ford would realize this as well and start making plans to export a next-gen Falcon, but sadly that is not the case.

Now before people start asking why the current Falcon can't be sold in North America, there are two answers to that question. One, the current FG Falcon is not designed for Left Hand Drive, and that is not cheap to fix. Two, even if they started a crash program tomorrow to convert it to LHD, it would still take 2-3 years before the car would be ready, leaving on-sale time of about 1-2 model years (if that); not enough time to recoup development costs. Using the next-gen Mustang platform for a next-gen Falcon wasn't likely either, as S550 (internal Ford designation for the 2015 Mustang) likely can't be stretched to Falcon size without major re-engineering of the structure, re-engineering Ford likely didn't feel was cost effective given slumping sales of the current Falcon.

All that said, I'll still pour one out when production of the current Falcon ends. Despite its age, its a much better car than the Taurus.

My concern is will Australia lose their manufacturing base over time. We almost lost ours in the United States. England lost theirs a long time ago. The other issue is the way people bought Toyotas and Hondas and Nissans and Mazdas in the United States is now happening in Australia.

I can name four Fords they "might" send to Australia already:

1. Explorer because of its size and utility/crossover and the fact it is front wheel drive and all wheel drive now and uses Ecoboost engine, it would replace the Ford Territory.2. Taurus because it is a large sedan larger than Fusion/Mondeo and it too is front wheel drive sharing parts with other Fords. It is a large sedan just like the Falcon is in that market.3. The C-Max because it is the right vehicle for the times.4. The Edge just because it is a crossover

Since I have done all of this talking about this, I decided to show you the Ford Falcon:

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This is hateful news. I still hope for a new RWD platform to spawn a Mustang, stretchable for a Ford sedan (for US and AU) and a Lincoln coupe and sedan. Are they seriously going to have a RWD platform ONLY for the Mustang? How long is that going to last before we see a Probe II in the lineup, masquerading as a Mustang?

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